Buy-to-let lending accounted for 11.5% of total gross mortgage lending in 2012, up from 9.8% in 2011, according to full-year data from the Council of Mortgage Lenders (CML).
Gross buy-to-let lending was 19% higher (at £16.4 billion) than the £13.8 billion advanced in 2011, reaching its highest level for four years.
On a quarterly basis, there were 36,700 buy-to-let loans, worth £4.6 billion, advanced in the fourth quarter – up from 34,300 loans worth £4.2 billion in the third quarter, and 34,200 loans worth £3.9 billion in the fourth quarter of 2011.
By number, a total of 136,900 buy-to-let loans were advanced during 2012 (of which nearly half were for remortgage). The total number of buy-to-let mortgages outstanding at the end of 2012 stood at 1,445,300, accounting for 13% of all mortgages.
Lenders typically required a minimum 25% deposit on buy-to-let loans throughout 2012, with an average minimum rental cover requirement of 125%.
1.14% of buy-to-let loans ended the year in arrears of more than three months, compared with 2.03% of owner-occupier loans.
Meanwhile, the annual repossession rate at 0.48% was higher than the equivalent owner-occupier rate of 0.27%, reflecting the different considerations involved in the two sectors.
“Buy-to-let is benefiting from strong tenant demand, which is likely to continue,” said CML director general Paul Smee.
“Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive.
“Landlords who can demonstrate a strong track record are in a good position to expand their portfolios. However, new potential landlords need to tread carefully before entering the buy-to-let market; considerations such as landlord licensing reinforce the need for potential landlords to gain a strong understanding of the legal and operating environment.
“Looking ahead, we will find out later in the year whether or not buy-to-let lending ends up within the scope of mortgage regulation as a result of the European Directive currently being finalised. If this does happen, policymakers must ensure that the very clear differences between buy-to-let and owner-occupier lending risks and operations are fully recognised in any regulatory framework that may emerge.”
